Global stock markets jumped after the U.S. and China signaled progress in long-stalled trade talks. Wall Street futures surged, with the Dow rising over 400 points and the Nasdaq climbing more than 1.5%. Investors were quick to cheer the potential thaw in relations between the world’s top two economies. Officials said a joint statement would follow, with both sides calling the discussions “productive.” But there’s one big problem—details are scarce. Neither side mentioned actual tariff levels, and markets are skeptical about whether a real deal has been done or if it’s just spin.
China, facing slower GDP growth, and the U.S., under inflation pressure, both seem eager to strike a deal. Market strategists say regular trade talks could now be on the table. If that happens, it could serve as a model for other countries negotiating with the U.S., like India or Japan. Though tariffs will likely remain, investors see any reduction as a win. The overall market tone is now cautiously optimistic.
European Markets Join the Rally
European stock markets opened higher in sync with global sentiment. Germany’s DAX and France’s CAC rose sharply, following gains in U.S. futures. Traders expect a positive spillover from the U.S.-China trade talks. European investors hope a finalized deal will stabilize trade flows and boost exports. With inflation still a concern, anything that reduces uncertainty is welcomed.
London’s FTSE 100 and Italy’s FTSE MIB also posted early gains. A weak euro and soft economic data had weighed on Europe for weeks. Now, signs of global trade recovery are breathing life back into the region’s bourses. But analysts warn that without hard details, this rally could fade fast. Investors are watching closely for any signs the deal could unravel.
Drug Price Cuts Hit Pharma Stocks in Asia and India
While stock markets rallied, pharmaceutical stocks in Asia and India took a hit. President Trump announced plans to slash U.S. drug prices through an executive order. That triggered panic selling in Japan, Korea, and India’s biggest drugmakers. Japan’s Chugai and Daiichi Sankyo plunged. India’s Sun Pharma dropped as much as 7%.
Many of these companies rely heavily on U.S. sales. If prices fall, so will revenues. Analysts say the plan’s legal path is unclear, but the threat alone is enough to scare investors. Medicare and Medicaid account for 40% of U.S. drug spending, so any pricing power loss would be significant. The pharma sector may remain under pressure until the policy’s impact becomes clearer.
India and Pakistan Shift to Growth as Truce Eases Tensions
Stock markets in India and Pakistan also surged, but for different reasons. A weekend ceasefire between the two nations eased geopolitical tensions. Pakistan’s KSE-30 Index jumped over 9%, the biggest single-day gain since 2008. India’s Nifty 50 gained 3% as investors refocused on the country’s growth potential.
Foreign investors may now return, drawn by stable politics and a likely U.S.-India trade deal. Recent rate cuts and IMF loans also lifted Pakistan’s outlook. Though tensions aren’t fully resolved, markets are betting that diplomacy will prevail. Still, analysts caution against overconfidence. Any sign of renewed conflict could quickly undo these gains.
Stock Markets Face Tariff Risks Despite Trade Hopes
Despite the bullish mood, risks remain. Trump’s tariff policy continues to weigh heavily. Even with trade progress, the U.S. plans to keep a 10% base tariff on imports. Recent 145% tariffs on Chinese goods are already hurting consumers and pushing inflation higher. China hit back with 125% duties of its own.
Investors are bracing for fresh inflation data this week, which could shake confidence. If prices spike, the Fed might hold off on rate cuts. That would be bad news for equities. Stocks are up for now, but traders know this rally is fragile. Until real trade deals are signed, markets will stay volatile.
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